When legislation enforcement officers busted 70 mid-level NYCHA bureaucrats on bribery expenses final week, they touted the sweep as the most important single-day takedown in Division of Justice historical past — a really public splash meant to ship a transparent anti-corruption message.
It seems that NYCHA’s prime managers obtained — and rejected — the same message years earlier when the town Division of Investigation (DOI) seemed into the identical situation: bribes paid to superintendents and assistant superintendents to attain small contracts of lower than $10,000 for repairs with out aggressive bidding.
In a Sept. 17, 2021 letter, the DOI notified then-NYCHA Chair Greg Russ that it had referred the findings of their investigation to legislation enforcement for legal prosecution.
Ralph Iannuzzi, the DOI inspector common overseeing NYCHA, particularly advisable that Russ finish the apply of permitting front-line superintendents to award small no-bid contracts at will with no oversight to “stop additional abuses.”
Russ and then-NYCHA Normal Supervisor Vito Mustaciuolo, who was CCd on Iannuzzi’s letter, responded with a top-level thumbs down, at first ignoring after which finally refusing the suggestion altogether.
Greater than two years and 70 arrests later, the unprecedented NYCHA takedown was introduced with nice fanfare and fireworks. The total-tilt media rollout hosted by Manhattan U.S. Legal professional Damian Williams included a map with colourful dots to clarify that this particular sort of alleged bribery had taken place everywhere in the metropolis, at practically 100 NYCHA developments.
However in all of the speeches about cracking down on the “tradition of corruption” at NYCHA — and in 476 pages of legal complaints — not a single prime stage NYCHA supervisor was talked about. The entire focus remained on decrease stage workers.
What stays unanswered is how all of this alleged dangerous conduct may have gone down with out NYCHA’s prime executives figuring out about it — notably as a result of they’d been warned concerning the potential for this particular vulnerability on a number of events by a number of events.
Rep. Ritchie Torres (D-Bronx), a former chair of the Metropolis Council’s Committee on Public Housing who grew up in NYCHA’s Throggs Neck Homes, made this level shortly after the large takedown.
“One case of bribery or a number of circumstances of bribery might be defined away as outliers,” he mentioned. “However 70 circumstances of bribery, affecting one-third of NYCHA properties, factors to a systemic failure of administration and oversight. It factors to a tradition of corruption.”
Torres ought to know. 5 years in the past, when he was on the Council, he responded to an October 2019 investigation by THE CITY that discovered $250 million in micro contracts going to a small cabal of distributors, together with a agency referred to as Matrixx Inc. run by an ex-NYCHA superintendent that had been singled out by DOI over allegations of shoddy and probably non-existent work. THE CITY’s report spelled out the potential for corruption that was embedded into the protocol of permitting these front-line managers the power handy out contracts with completely no oversight.
On the time Torres demanded modifications. Nothing modified.
“For 5 years, I’ve been sounding the alarm about NYCHA’s persistent lack of oversight over no-bid contracting, which may simply change into a breeding floor for fraud, corruption, and abuse,” he mentioned final week.
The System Was Weak
Two years after THE CITY’s 2019 report, Torres’ authentic prediction got here true: DOI and Brooklyn District Legal professional Eric Gonzalez introduced the arrest of 9 contractors who’d obtained thousands and thousands of {dollars} in no-bid micro-contracts from NYCHA.
In that September 2021 case, a NYCHA superintendent had gone to DOI to say some distributors had provided him bribes. DOI despatched in undercover brokers posing as NYCHA superintendents at Brooklyn developments and secretly recorded audio and video of distributors handing over envelopes of money and bottles of dear Johnnie Walker scotch.
Saying the arrests, then-DOI Commissioner Margaret Garnett famous that though on this case a NYCHA staffer had completed the correct factor, the system because it existed “was additionally extremely weak to fraud and corruption.”
She famous a peculiar pattern baked into the micro-contract awards course of. As a result of bribes have been primarily based on a proportion of the contract, there was an amazing incentive to inflate the quantity of the contract to only underneath $10,000, even when the job takes an hour and isn’t price practically that a lot.
To treatment the system’s ills, Garnett made particular suggestions to NYCHA she hoped would cease this apply and add actual oversight to the awards course of, together with:
Eradicating front-line superintendents from awarding these contracts and turning that over to the central procurement unit.
Stopping overbilling by contractors charging near the $10,000 restrict for trivial jobs by making a “fastened value listing” of typical restore prices and checking the work that’s truly carried out.
In an interview with THE CITY on the time, Garnett was optimistic.
“Russ and Vito have been very supportive,” she mentioned, including that she was “anticipating to listen to NYCHA adopting these suggestions.”
It didn’t occur. As a substitute the 2 prime NYCHA executives rejected each of DOI’s recommendations, beginning with taking the superintendents out of the method.
The reasoning, on the time, was that no-bid contracts allowed repairs at residences to occur sooner, and NYCHA was struggling in useless to assault an enormous backlog of restore requests for the whole lot from busted plumbing to collapsed ceilings.
Russ and Mustaciuolo additionally assured DOI that after the arrests of the contractors, superintendents have been getting extra ethics coaching. Plus, NYCHA insisted, they have been doing higher background checks on distributors.
Final week after the arrest of 70 present and former workers, the housing authority mentioned in response to THE CITY’s questions on why they didn’t undertake DOI’s prompt reforms in 2021, “NYCHA didn’t implement the advice to take away micro-purchases as a property administration device in an try to proceed prioritizing the every day operational wants of residents and the constructing portfolio.”
“NYCHA had felt strongly that there wanted to be flexibility on the growth stage to safe the quickest attainable companies for residents, notably in moments of emergency — and micro-purchases are an avenue generally utilized by public housing authorities for attaining this.”
NYCHA administration additionally rejected DOI’s advice to forestall overbilling for small jobs that invoice proper as much as the $10,000 restrict, declining to undertake DOI’s “fastened tariffs” of typical prices for repairs reminiscent of “value per foot” of tile or common price for changing toilet fixtures.
Then a shift occurred behind the scenes. Greater than two years after DOI’s recommendations — after Russ and Mustaciuolo have been not operating the company — NYCHA in November 2023 knowledgeable DOI that they’d begun requiring distributors to itemize their work in invoices to higher perceive what they have been paying them for.
However in between the time NYCHA’s administration rejected DOI’s recommendations and the date they started taking a tougher take a look at the “just below $10,000” contracts, extra corruption emerged. DOI’s persevering with investigations once more turned public in November 2022 when two NYCHA superintendents pleaded responsible to federal expenses of taking bribes to award no-bid micro contracts.
That was only a trace of what was to return.
Greater than a yr afterward Feb. 6, Manhattan U.S. Legal professional Williams and a number of federal and metropolis legislation enforcement officers arrested 70 present and former superintendents and assistant superintendents for allegedly taking bribes.
Addressing the media, Garnett’s successor, DOI Commissioner Jocelyn Strauber, stepped as much as the microphone in a little bit of a deja vu second, saying that DOI was as soon as once more making suggestions for reform — 14 in all, together with the identical recommendations NYCHA had earlier rejected.
Inside hours, NYCHA’s present CEO, Lisa Bova-Hiatt, promised the company would do no matter DOI prompt this time.
Relating to DOI’s advice to finish the apply of letting superintendents award no-bid micro contracts and all of DOI’s newest recommendations, Barbara Brancaccio, Chief Communication Officer for NYCHA, mentioned the authority will now embrace a distinct, extra welcoming strategy:
“After this clear violation of belief and misuse of authority, and as a part of NYCHA’s ongoing and collaborative efforts alongside DOI to scale back fraud and abuse of micro-purchases, we’ll now implement DOI’s full suite of suggestions.”
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